China’s consumer inflation hit a five-month low in November, with the consumer price index (CPI) rising just 0.2% year-on-year, lower than the 0.3% increase in October and a 0.5% forecast. Month-on-month, CPI fell 0.6%, compared to a 0.3% decline in October. A 2.7% drop in food prices, attributed to favorable weather conditions, was the main contributor to the monthly decline. Core inflation, excluding volatile food and fuel prices, slightly increased to 0.3% from 0.2% in October.
Meanwhile, the producer price index (PPI) fell 2.5% year-on-year, marking the 26th consecutive month of decline, though at a slower rate than October’s 2.9% drop. Analysts suggest that while recent stimulus measures have helped ease some deflationary pressures, China’s economic recovery remains weak due to persistent overcapacity.
Despite a boost in household spending, fueled by subsidized trade-ins of autos and home appliances, economic growth remains fragile. The government has unveiled a 10 trillion yuan debt package to ease local government financing strains. However, economists remain cautious, forecasting modest growth amid expected U.S. tariff hikes and a still-volatile property sector. Fitch Ratings has lowered its 2025 growth forecast for China to 4.3%.
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